The British pound has gone back and forth during the trading session on Wednesday as we await the Federal Reserve statement. This will have a massive influence on risk appetite, but at this point it will be interesting to see whether or not the 200 day EMA holds. It should be noted that there was at least an attempt to make it hold during the Tuesday session, so if we get more “risk on” it is likely that this pair will go looking towards ¥139 level again.
GBP/JPY Video 11.06.20
If we break down below the lows of the Tuesday session, then it is highly likely we will fall towards the ¥135 level to retest the previous resistance. That level should now be massive support, so I would be extremely interested in buying the British pound at that level. Having said that, the market is likely to find plenty of value hunters in that area but if we were to break down below there, then it could signify a major shift in risk appetite. That is not my base case scenario, but a pullback to the 135 level is not necessarily out of the question.
On the other hand, if we break above the ¥140 level, it is likely that we will go much higher, perhaps reaching towards the ¥150 level on the longer-term charts. That does not mean that we go there right away, but it becomes more of a trend of play, which clearly, we have a lot of buyers in this area to try to pick the pair. Pay attention, we should get a nice set up over the next couple of days.
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This article was originally posted on FX Empire